Millions in Medicaid overpayments uncollected due to faulty auditing

Medicaid Integrity Contractor (MIC) audits failed to recoup overpayments due to flawed methods of identifying providers who potentially received excess funds, according to a new report from the Office of Inspector General.

Although the 370 assigned audits between Jan. 1 and June 30, 2010 had about $80 million in potential overpayments, the report found that only 11 percent of the audits identified overpayments--recouping only $6.7 million.

Moreover, 42 percent found no overpayments, while 39 percent remained ongoing as of June 2011 and are not likely to identify overpayments.

"Specifically, 109 of the 144 ongoing audits are unlikely to identify overpayments because the methods used to select the audit targets have already proven unsuccessful," the report states.

Incorrect claims data, as well as the misinterpretation of the claims data with regards to state-specific Medicaid policies led to misidentified audit targets, according to the report.

To ensure audits target the right providers, the agency recommends collaborative efforts among Audit MICs, Review MICs, the states and the Centers for Medicare & Medicaid Services, according to an OIG statement. Not only does collaboration eliminate duplicative efforts, it also completes audits an average of 2.5 months faster than regular audits, according to the report's authors.

Given the findings, CMS said it has revamped how it selects audit targets--such improvements could save the government money as CMS spent about $17.2 million on MIC audits in fiscal year 2010.

In its accompanying study, the OIG concluded last month that MIC reviews are not being used to their full potential because they can only access incomplete data and cannot make specific recommendations about which organizations should be further scrutinized, FierceHealthFinancepreviously reported.